Market announcement

Title

Unaudited consolidated interim accounts for the second quarter and first six months of 2023

Message

Segments (EURm)           Q2/23   Q2/22   Change   6m/23   6m/22   Change
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  Supermarkets              154.5   143.8    7.4%    301.7   283.3    6.5%

  Department stores         27.0    26.8     0.7%    51.7    48.5     6.7%

  Cars                      55.9    38.6    44.7%    97.6    72.6    34.4%

  Security                   3.5     2.3    55.1%     6.4     4.5    40.3%

  Real Estate                1.6     1.5     5.5%     3.2     3.0     5.8%
----------------------------------------------------------------------------
  Total sales               242.5   213.0   13.8%    460.5   411.9   11.8%
----------------------------------------------------------------------------


  Supermarkets               4.6     3.1    48.3%     6.3     5.4    17.1%

  Department stores          1.0     2.2    -55.9%    0.2     0.5    -61.2%

  Cars                       4.7     3.1    50.2%     7.7     5.3    47.0%

  Security                   0.1     0.0    86.7%     0.1     0.0    217.1%

  Real Estate                3.0     2.8     7.5%     5.5     5.4     0.8%

  IFRS 16                   -0.5    -0.6    -11.8%   -1.0    -1.0     1.7%
----------------------------------------------------------------------------
  Total profit before tax   12.8    10.7    20.5%    18.7    15.6    20.5%
----------------------------------------------------------------------------

The  consolidated unaudited sales revenue of the  Group in the second quarter of
2023 was 242.5 million euros, which was 13.8% more than the sales revenue of the
previous  year.  The  sales  revenue  in  the first six months was 460.5 million
euros,  which was an 11.8% increase  in comparison with the  result of the first
six  months  of  2022, when  the  sales  revenue  was  411.9 million  euros. The
consolidated unaudited net profit of the Group in the second quarter of 2023 was
12.8 million  euros, which  was 20.5% higher  than the  profit of the comparable
period  last year. The net profit of the  Group in the first six months of 2023
was  13.4 million euros,  which exceeded  the result  of the previous comparable
period by 21.4%. The pre-tax profit earned in in the first half was 18.7 million
euros,  showing a 20.5% increase compared to  last year. Net profit was affected
by  the  dividend  payment,  from  which  5.3 million  euros  of  income tax was
calculated  in the  first quarter  of 2023; 4.5 million  euros of income tax was
calculated a year before.

The significant increase in the sales revenue of the Group in the second quarter
of 2023 is partly due to the general price increase reaching the sales prices of
the  retail segments of  the Group, unfortunately  sometimes leading to a slight
decrease  in volume consumption. The  supply chain issues in  the car segment in
recent  years increased the number  of customers who wanted  to buy a car, which
greatly  contributed to  the strong  44.7% increase in  sales revenue of the car
segment  after  the  improvement  of  car  availability.  However, the prices of
vehicles have also increased and in terms of volume sales, the growth of the car
segment  is  slightly  more  modest.  The  resurgence of availability across the
market  has led to more flexible pricing.  The increasing pressure on the margin
accompanying the decrease in the purchasing power of customers is also affecting
other  retail segments of the Group.  Customers who value quality have supported
the  recovery of sales  revenue in the  Kaubamaja department stores segment. The
impact  of  comprehensive  cost-saving  measures  implemented by the supermarket
segment, which suffered the most due to extremely high energy prices in 2022, to
mitigate  cost growth has been more evident in the reporting period. Cost-saving
measures  combined with lower energy costs have strengthened the profit position
of  the supermarkets and helped  bring the operating margin  of the segment back
close  to 2021 levels. The labour  costs of the Group  increased by 12.5% in the
second  quarter  of  2023, while  the  number  of  employees decreased by 5.7%.
Compared to the previous year, the shoe stores of the Group have been closed.

In  the second quarter, the largest store in the supermarket segment in Tallinn,
Järve,  was closed for renovation  works for nearly two  months. Reopened at the
end  of May, the renovated Järve Selver  has been well received by customers. In
the  first  quarter,  the  supermarket  segment  renovated the Ringtee Selver in
Tartu.  In addition, the supermarket segment plans to renovate the Solaris store
in the centre of Tallinn and open a new hypermarket by the Tallinn roundabout in
the reporting year. In the Kaubamaja department stores segment, development work
on   the  e-store  platform  continued  in  the  second  quarter.  In  addition,
preparatory work was started for the renovation of the I.L.U. cosmetics store in
Kristiine  Centre, the updated  opening of which  is planned for  August. In the
first quarter, the Ülemiste I.L.U. cosmetics store was renovated: the sales area
was  increased by almost half to 460 square metres. The NYX make-up shop-in-shop
with  a separate entrance was opened in  the Ülemiste I.L.U. cosmetics store. In
the  real estate segment, the solar park built  on the roof of Viimsi Centre was
completed  in the second quarter In  January, the underperforming WOW Selver was
closed  in Saaremaa, and in  May, Punane Selver in  Lasnamäe, Tallinn, closed as
well.

Supermarkets

In  the  first  six  months  of  2023, the  consolidated  sales  revenue  of the
supermarket  business segment  was 301.7 million  euros, an  increase of 6.5% as
compared  to the same  period of the  previous year. In  the second quarter, the
consolidated  sales  revenue  was  154.5 million  euros,  an increase of 7.4% as
compared  to the same period of the previous year. The average sales revenue per
square metre of selling space was 0.43 thousand euros per month in the first six
months of 2023 and 0.44 thousand euros per month in the second quarter of 2023,
which  is  respectively  7.2% and  7.3% more  than  in  the  same periods of the
previous year. From the point of view of comparable stores, the revenue from the
sale  of goods per square metre of  selling space was 0.44 thousand euros in the
first  half  of  the  year  and  0.45 thousand  euros  in the second quarter, an
increase  of 8.8% and 10.6% respectively,  compared to the  reference period. In
the  first half of 2023, 21.7 million purchases were made from the stores, which
was 3.5% more than in the reference year.

In  the second  quarter of  2023, both pre-tax  profit and  net profit were 4.6
million  euros, which was  1.5 million euros more  than in the reference period.
The  consolidated pre-tax profit of the supermarket segment in the first half of
the  year was 6.3 million euros, increasing by 0.9 million euros compared to the
previous  year. The  net profit  in the  first half  of the year was 5.2 million
euros,  increasing  compared  to  the  previous  year  by 1.9 million euros. The
difference  between net profit and profit before income tax is due to the income
tax  paid on dividends - this year,  the income tax on dividends was 1.0 million
euros less than the year before.

The  financial results of the  first half of 2023 were  affected by the turnover
added  from  the  opening  of  the  Priisle  and Tabasalu Selver supermarkets in
Tallinn  in  2022 and  the  lost  turnover  due  to the closure of WOW Selver in
Saaremaa  in January  and the  closure of  Punane Selver  in May.  The temporary
closure  of Ringtee Selver in Tartu and the temporary suspension of sales of the
largest  Selver store  in Tallinn,  Järve, due  to renovation  works also  had a
significant  impact. All the  projects listed above  have also involved one-time
costs  and investments. The turnover results of the supermarket segment continue
to  be affected by accelerated inflation.  The significant increase in the price
of food products has changed the buying habits of customers and keeps the volume
sales of goods below the level of last year. The decline in volume sales stopped
at  the end of the second quarter. The warm weather had a positive effect on the
sale  of  seasonal  goods  while  the  demand  for industrial goods that are not
essential  on a daily basis is more  modest. Expenditures on energy carriers are
at  the level of last year thanks to the implementation of savings opportunities
and  stabilisation of prices. At  the same time, the  sharp and high increase in
energy  prices and raw material prices that started at the beginning of 2022 has
raised   almost   all   expenses.   Price  increases,  despite  the  search  and
implementation  of  savings  opportunities,  have  a  significant  impact on the
financial result. The growth of labour costs in the supermarket segment has been
12% in  the first half of the year,  exceeding the growth rate of sales revenue.
On the one hand, this has resulted from the general pressure to raise wages, but
there  has also been  a constant search  for ways to  increase the efficiency of
work processes, reduce working hours, and thereby increase employee wages.

The  sales revenue of e-commerce  decreased due to the  higher reference base in
the  first quarter. However, in the second  quarter, the sales revenue of the e-
commerce  returned to growth, exceeding  the sales revenue of  last year by more
than  25%. At the  beginning of  2023, e-Selver earned  two titles in the public
survey organised by the Estonian Ecommerce Association: the title of the best e-
store  in the category of food e-stores  and the title of the people's favourite
e-store in general.

The  rapid decline in the  production volume of Kulinaaria  OÜ, which belongs to
the  supermarket segment, which started in the  second half of last year, slowed
down  in the first quarter, and in the second half of the second quarter, it has
begun  to rapidly approach the volume of the reference period. An important goal
of  Selveri Köök is the continuous development  of new products, keeping up with
the  change in consumption habits and  constantly offering customers new tastes.
At  the beginning of May, the food magazine Oma Maitse chose our seafood risotto
and  strawberry-pistachio curd cake among its favourites. The same products were
also  recognised in the Eesti Parim Toiduaine 2023 competition. When it comes to
packaging,  Kulinaaria OÜ has  completely switched to  salad boxes made of 100%
recycled  material, which  ensure food  safety and  hygiene. In  addition, their
production of which requires less plastic.

Selver  has renovated two  stores this year.  In February, the renovated Ringtee
Selver  in Tartu was reopened to customers and  in May, the largest store of the
Selver  chain, Järve Selver, was reopened in Tallinn. In July, the renovation of
the  Solaris Grocery Store in Tallinn will begin and one new store is planned to
open  in the  second half  of the  year. In  the first  quarter, fourteen Selver
stores  started issuing identity documents issued by the Police and Border Guard
Board. By the end of the second quarter, this number had reached 40.

As  at the end of March, the  supermarket segment includes 70 Selver stores, one
Delice store, Solaris food store, Rändpood store, and a cafe, with a total sales
area  of 116.2 thousand m²; in addition, e-Selver,  which is an e-store with the
largest service area in Estonia, and the central kitchen Kulinaaria OÜ.

Department store segment

The  sales revenue of  the Kaubamaja department  stores business segment for the
six  months  of  2023 was  51.7 million  euros,  exceeding the sales of the same
period  last year  by 6.7%. The  sales revenue  of the  second quarter was 27.0
million  euros, which exceeded the result of  the comparable period last year by
0.7%. The  pre-tax profit of the Kaubamaja  department store segment for the six
months of 2023 was 0.2 million euros, 61.2% lower than a year ago. In the second
quarter, the pre-tax profit was 1.0 million euros, 55.9% less than last year.

The  average sales  revenue of  Kaubamaja department  stores per square metre of
selling  space was 0.3 thousand euros  per month in the  first six months, 6.4%
higher  than in the  same period last  year. Last year,  the full-scale war that
started  in Ukraine on 24 February negatively  affected sales in the second half
of  the first quarter. This spring, however,  customer interest was high and the
number  of visits  to stores  was much  higher than  last year.  The discount of
winter  season goods was affected  by a warmer than  average winter in the first
six  months of the year, which is  why the discount percentages were higher this
year, but the increased sales volumes compensated for the lower margin and had a
positive  effect  on  the  result.  At  the  same time, the result of the second
quarter  was  negatively  affected  by  the  construction  works of the Old City
Harbour  tramline in the  centre of Tallinn,  which started at  the beginning of
April,  as a result of which most of the intersections surrounding the Kaubamaja
department  store were  closed by  the beginning  of July. Pedestrians were also
affected.  Therefore,  the  Group  offered  higher  discount percentages for the
summer campaign this year.

In  the second quarter of 2023, the sales  revenue of TKM Beauty Eesti OÜ, which
operates  the I.L.U. cosmetics stores, was 1.9 million euros, 24.1% more than in
the  second quarter of 2022. In the second quarter of 2023, the profit was 0.06
million  euros, 0.02 million  euros more  than during  the comparable  period in
2022. The  sales revenue of the first  six months of 2023 was 3.6 million euros,
24.9% more  than during  the same  period of  2022. In the  first six  months of
2023, profit  was  0.1 million  euros,  0.08 million  euros more than during the
comparable  period  in  2022. The  good  sales  result of the second quarter was
driven  by the  newly renovated  I.L.U. cosmetics  store in Ülemiste Centre. All
other  stores  also  grew  with  the  support of successful marketing campaigns.
Preparatory  work for the renovation of the store in Kristiine Centre began, the
updated opening of which is planned for August.

The  2022 reference base of the Kaubamaja  department store segment was affected
by  the closure of shoe stores operated by  TKM King AS in the second quarter of
2022. The  sales revenue of the  shoe stores in the  first half of 2022 was 2.0
million  euros and  the profit,  0.02 million euros.  The sales  revenue for the
second  quarter of 2022 was 0.7 million euros and the profit, 0.4 million euros.
By  the end  of the  second quarter  of 2022, all  ABC KING  and SHU shoe stores
operated  by TKM King AS were closed, the lease agreements with the centres were
terminated, and the employees of the stores were laid off.

Car trade

The  sales revenue of the car trade segment for the first half of 2023 was 97.6
million  euros, increasing by  34.4% compared to the  same period last year. The
sales  revenue of 55.9 million euros in the second quarter was 44.7% higher than
the  sales revenue of the second quarter of 2022. During the first six months, a
total  of 3,169 new vehicles were sold, 1,708 of them in the second quarter. The
net  profit of  the segment  in the  first half  of 2023 was  6.6 million euros,
exceeding  the profit  of the  same period  of the  previous year by 1.7 million
euros.  The pre-tax  profit of  the segment  in the  first half of 2023 was 7.7
million  euros, exceeding the  profit for the  first half of 2022 by 2.5 million
euros.  The pre-tax profit of the  second quarter of 2023 was 4.7 million euros,
which  is 1.6 million euros more than the profit  of the same period of the year
before.

Regarding  the first half and second quarter  of 2023, it can be said in summary
that the supply of new vehicles has improved both in terms of brands represented
by the Group and by competitors. The sales of the Kia importer to the contracted
dealers  of  Kia  increased  by  16% and  profitability was also affected by the
significantly improved availability of the Kia Sorento and the EV6 electric car.
On  the  one  hand,  the  improvement  of  the situation has made it possible to
increase  sales. On the  other hand, however,  price pressure has increased. The
sales  success in  the second  quarter is  thanks to  largescale sales  to fleet
customers and car rental companies, such as Bolt, Citybee, and Herz. After-sales
services  and body repair departments are working at full capacity, as the fleet
of  brands sold by  the Group has  been constantly growing.  The increase in the
price  of new cars  has led to  a greater interest  in used cars. An increase in
interest in electric cars and plug-in hybrid vehicles can also be seen.

The  Group obtained the right to start  selling new Shkoda vehicles in Lithuania.
The  new Shkoda Superb mid-class sedan and  the KIA EV9 electric SUV are expected
to hit the market in the near future.

Security segment

The sales revenue of the security segment outside the Group in the first half of
2023 was  6.4 million  euros,  increasing  by  40.3% in comparison with the same
period  of last year. The pre-tax profit of the segment in the first half of the
year was 0.1 million euros, increasing by 0.1 million euros compared to the same
period  last year.  The sales  revenue of  the segment  outside the Group in the
second  quarter of 2023 was  3.5 million euros, increasing  by 55.1% compared to
the  same period  last year.  The pre-tax  profit of  the second  quarter of the
segment  was 0.1 million euros, increasing by 0.03 million euros compared to the
same period last year.

The second quarter was successful for all business areas of the security segment
and  both turnover  and profit  increased. Fallen  energy prices  had a positive
effect  on profits, but the pressure for  other input prices to increase remains
strong.  The risks  of customers  and cooperation  partners ending up in payment
difficulties have increased.

In   May,  an  agreement  was  signed  to  acquire  a  100% stake  in  Skarabeus
Julgestusteenistus  OÜ and at the beginning  of July, the necessary approval for
the   transaction   was  received  from  the  Competition  Authority.  Skarabeus
Julgestusteenistus  OÜ is  a pan-Estonian  security company  with departments in
Tallinn,  Tartu,  Pärnu,  and  Central  Estonia, which provides manned security,
patrol, and technical security services. The turnover of the company in 2022 was
3.1 million  euros and  the company  employs 168 people.  The acquisition of the
stake  in  Skarabeus  Julgestusteenistus  OÜ  enables  the  security  segment to
strengthen  its business activities  in all areas  by providing positive synergy
through  the  integration  of  strong  industry  know-how, increased operational
capacity,  and  cost  efficiency.  The  transaction  creates  an  opportunity to
continue successful growth and develop new services.

Real estate

The  sales revenue of the real estate  segment outside the Group was 3.2 million
euros  in the first six months of 2023. Sales revenue increased by 5.8% compared
to  the same period the previous year.  The sales revenue of the segment outside
the  Group in the second quarter  was 1.6 million euros. Sales revenue increased
by  5.5% compared to the  previous year. The  pre-tax profit of  the real estate
segment  in  the  first  half  of  2023 was  5.5 million  euros, with the profit
increasing  by 0.8%. The pre-tax profit of the second quarter of the segment was
3.0 million euros. Pre-tax profit increased by 7.5% over the comparison period.

The  number of visitors to the shopping  centres belonging to the segment, which
at  the end of  last year due  to the uncertainty  in the economy  turned into a
decline, has again shown strong growth since the beginning of the year. This has
been  supported by high-quality  and inspiring marketing  campaigns to highlight
the  good reputation of the centres  for both high-quality product selection and
service.  The success of the centres in  both Estonia and Latvia has contributed
to the growth of the sales revenue of the segment in the first half of the year.
In  May, a car  wash operated by  an external party  was opened in the immediate
vicinity of Peetri Selver.

The  profit of the  segment is greatly  affected by the  increase in the cost of
loan  money due to the  increase in interest rates  in the euro area intended by
the  European Central Bank  to tighten monetary  policy, as the  majority of the
loan  portfolio of  the Group  is concentrated  in the  real estate segment. The
interest  expense has multiplied compared  to the reference base  of a year ago.
The increase in profit in the second quarter was affected by a one-time fine due
to the early termination of a lease agreement.

The  construction of the Viimsi  Centre solar energy park,  which started at the
end of last year, was completed in May. This is the second building of the Group
that  has  an  electricity  generation  plant  installed  on  its roof where the
produced electricity is mainly used for the building itself.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

-------------------------------------------------------------------------
                                                 30.06.2023   31.12.2022
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          12,947       22,436

  Trade and other receivables                        22,878       27,200

  Inventories                                        93,209       89,194
-------------------------------------------------------------------------
  Total current assets                              129,034      138,830
-------------------------------------------------------------------------
  Non-current assets

  Long-term receivables and prepayments                 307          299

  Investments in associates                           1,702        1,722

  Investment property                                63,860       63,623

  Property, plant and equipment                     419,262      420,600

  Intangible assets                                  22,374       21,723
-------------------------------------------------------------------------
  Total non-current assets                          507,505      507,967
-------------------------------------------------------------------------
  TOTAL ASSETS                                      636,539      646,797
-------------------------------------------------------------------------

-------------------------------------------------------------------------
  LIABILITIES AND EQUITY                             ,
-------------------------------------------------------------------------
  Current liabilities

  Borrowings                                         45,178       97,107

  Trade and other payables                           99,803      111,449
-------------------------------------------------------------------------
  Total current liabilities                         144,981      208,556
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        258,274      190,825

  Deferred tax liabilities                            5,299        5,299

  Provisions for other liabilities and charges          575          458
-------------------------------------------------------------------------
  Total non-current liabilities                     264,148      196,582
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 409,129      405,138
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                               105,750      106,981

  Retained earnings                                 102,765      115,783
-------------------------------------------------------------------------
  TOTAL EQUITY                                      227,410      241,659
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      636,539      646,797
-------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

  -----------------------------------------------------------------------------
                          II quarter     II quarter                  6 months
                             2023           2022      6 months 2023    2022
  -----------------------------------------------------------------------------


   Revenue                     242,465        212,996       460,548     411,919

   Other operating
   income                          528            535           860         862



   Cost of merchandise        -176,409       -153,471      -334,982    -299,784

   Service expenses            -14,230        -14,377       -30,125     -29,014

   Staff costs                 -26,869        -23,881       -52,721     -46,228

   Depreciation,
   amortisation and
   impairment losses           -10,212         -9,779       -20,278     -19,421

   Other expenses                 -190           -174          -583        -487
  -----------------------------------------------------------------------------
   Operating profit             15,083         11,849        22,719      17,847
  -----------------------------------------------------------------------------
   Finance income                   15              1            16           2

   Finance costs                -2,291         -1,232        -4,097      -2,391

   Finance   income  on
   shares of associates
   accounted  for using
   the equity method                41             44           110         102
  -----------------------------------------------------------------------------
   Profit before tax            12,848         10,662        18,748      15,560
  -----------------------------------------------------------------------------
   Income tax expense               -1             -1        -5,301      -4,480
  -----------------------------------------------------------------------------
   NET PROFIT FOR THE
   FINANCIAL YEAR               12,847         10,661        13,447      11,080
  -----------------------------------------------------------------------------
   Other  comprehensive
   income:

   Items  that will not
   be      subsequently
   reclassified      to
   profit or loss
  -----------------------------------------------------------------------------
   Other comprehensive
   income for the
   financial year                    0              0             0           0
  -----------------------------------------------------------------------------
   TOTAL COMPREHENSIVE
   INCOME FOR THE
   FINANCIAL YEAR               12,847         10,661        13,447      11,080
  -----------------------------------------------------------------------------
 Basic    and   diluted
 earnings   per   share
 (euros)                          0.32           0.26          0.33 0.27

Raul Puusepp

Chairman of the Board

Phone +372 731 5000